n p successfully resenting earned value - microplanning€¦ · · 2014-03-24successfully...

PresentingSuccessfully

Earned Value Your guide to Earned Value Management

What is Earned Value Management?Earned Value Management (EVM) is a project management system that combines schedule performance and cost performance to answer the question, “What did we get for the money we spent?”

Basic concepts of EVM:

• All project steps “earn” value as work is completed. • The Earned Value (EV) can then be compared to actual costs and planned costs to

determine project performance and predict future performance trends. • Physical progress is measured in dollars, so schedule performance and cost

performance can be analyzed in the same terms.

Earned Value has been used since the 1960’s by the Department of Defense as a central part of the C/SCSC (Cost/Schedule Control Systems Criteria). Recently, the DOD revised the 35 criteria contained in the C/SCSC and produced the 32 criteria for EVMS (Earned Value Management Systems).

These criteria have since been accepted by the American National Standards Institute/Electronic Industry Association as a new standard, called ANSI/EIA 748. Now, EVM is being used in a wider variety of government contracts, and is spreading through the private sector as a valuable tool for project managers.

2002October

NovemberDecember

SummaryProgram Review

Status

$0.00

$1,000.00

$2,000.00

$3,000.00

$4,000.00

Earned ValueBudget

Spending

Earned Value Report

Contract ReviewProject /Tasks

Budget ACWPSpending BCWPEarned ValuePRCNTCMPLT

Totals for Project

$4,025.00 $1,375.00$2,585.62 64.2%

Task 1

$950.00 $725.00$743.50 78.3%

Task 1-A

$300.00 $200.00$235.71 78.6%

Task 1-B

$400.00 $350.00$321.74 80.4%

Task 1-C

$250.00 $175.00$186.05 74.4%

Task 2

$1,300.00 $500.00$836.56 64.4%

Task 2-A

$725.00 $200.00$483.33 66.7%

Task 2-B

$225.00 $100.00$109.29 48.6%

Task 2-C

$350.00 $200.00$243.94 69.7%

SummaryProgram Review

Status

Contracts review: 11-30-02Sign Off: _________________

2002

March AprilMay

Summary

Status

Program Review

CPI from

1 to 1.3

Completed TaskIncomplete Task

CPI above 1.3CPI below 1

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

BCWSBCWPBudget

ACWP

Performance Review

Project/Tasks

TotalBudget

BCWSACWP

SpendingBCWPE Value

PRCNTCMPLT

SV CV CPI SPI

Project ABC

$2,975 $1,740 $1,575 $2,005 67.4% $267 $431 1.27 1.15

Task 1

$300 $300$350 $300 100.0% $0 ($50) 0.86 1.00

Task 2

$400 $400$400 $400 100.0% $0 $0 1.00 1.00

Task 3

$250 $128$175 $140 55.8% $12 ($35) 0.80 1.09

Task 4

$725 $456$200 $564 77.8% $108 $364 2.82 1.24

Task 5

$400 $189$100 $211 52.6% $22 $111 2.11 1.12

Task 6

$350 $159$200 $223 63.6% $64 $23 1.12 1.40

Task 7

$550 $107$150 $168 30.6% $61 $18 1.12 1.57

Summary

Status

Program Review

CPI from

1 to 1.3

Completed TaskIncomplete Task

CPI above 1.3CPI below 1

ACWP

Budget

BCWP

BCWS

Successfully Presenting Earned Value page 2

What are the benefi ts of usingEarned Value Management?In a typical spend plan analysis, physical progress is not taken into account when analyzing cost performance. Instead, a project’s actual costs to date are simply compared to planned costs, often with misleading results.

March April May

$0.00

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$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

BudgetAC

Budget-at-Completion

Planned Value = $1000

Actual Costs = $1000

Figure 1

2002March April May

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

EVBudgetAC

PlannedValue = $1000

ActualCosts = $1000

EarnedValue = $750

Example:

A task has a planned value (PV) of $1000, and actual costs (AC) of $1000. It appears this task has perfect cost performance, and is in good shape to fi nish on-budget (Figure 1).However, if physical progress is taken into account, the results may differ.

Figure 2

In Figure 2, the project has spent $1000 in actual costs but has only achieved $750 of Earned Value.

This is called a cost overrun, and this project would have a Cost Variance (CV) of -$250.

From this example, we can see that EVM expands on the two-dimensional analysis– “Has this project spent more or less money than planned?”– by adding the third dimension– “What did we get for the money we spent?”


Building Blocks of Earned Value AnalysisIn addition to more accurate project status assessment, EVM makes it easy for a project manager to analyze both schedule and cost performance in a variety of ways. Using a limited set of basic task information, it is possible not only to determine how a project has been performing, but to predict future performance trends as well.

Basis for Earned Value Analysis:

• Budget at Completion (BAC) = Overall approved budget for a task. • Actual Costs (AC) = Total amount spent on a task up to the current date. • Percent Complete = Task progress, related as either EV/BAC, or simply physical

progress shown by the fi ll of the task bar.

Once these three measurements have been established, the following calculations can be performed:

• Earned Value (EV) = BAC x Percent Complete. The budgeted cost of completed work as of the current date.

• Planned Value (PV) = The point along the time-phased budget that crosses the current date. Shows the budgeted cost of scheduled work as of the current date.

2002

October November December

$4,000.00

Earned Value Report Contract Review

Project /Tasks

BAC AC %Complete

Totals for Project $4,025.0 $1,375.00 63.7%

Task 1 $950.0 $725.00 78.3%

Task 1-A $300.0 $200.00 78.6%

Task 1-B $400.0 $350.00 80.4%

Task 1-C $250.0 $175.00 74.4%


Building Blocks of Earned Value Analysis

View detailed EVM data in actual dollars as part of a presentation schedule...

...or use an easy-to-read DataGraph for at-a-glance visual analysis of project trends.


Summary Program Review Status

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00

$4,000.00

Earned ValueBudgetActual CostsPlanned Value


BAC

PV

EV

AC

DATELINE

October November December1 2 3 4 5 6 7 8 9 10 11 12 13 14

Project /Tasks

% BAC ActualCosts

EarnedValue

PlannedValue

Totals for Project 64% $4,025 $1,375 $2,564 $2,780

Task 1 78% $950 $725 $743 $783

Task 1-A 79% $300 $200 $236 $246

Task 1-B 80% $400 $350 $322 $339

Task 1-C 74% $250 $175 $186 $198

In Figure 6, the project shown has a negative SV, because it has “earned” less value than was planned, as of the current date.

However, it has a positive CV, because the Earned Value is greater than the Actual Costs accrued.


Performance Indicesand VarianceOnce Earned Value and Planned Value are known, they can then be used to determine schedule and cost variance, and calculate performance effi ciency.

• Schedule Variance (SV) = Earned Value – Planned Value. The difference between what was planned to be completed and what has actually been completed as of the current date.

• Cost Variance (CV) = Earned Value – Actual Costs. The difference between the work that has been accomplished (in dollars) and how much was spent to accomplish it.

October November December January

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00

Planned ValueEarned ValueBACActual Costs

Schedule Variance (SV)

Cost Variance (CV)

Figure 6


Performance Indicesand Variance

• Schedule Performance Index (SPI) = Earned Value / Planned Value. Schedule variance related as a ratio instead of a dollar amount. A ratio less than 1 indicates that work is being completed slower than planned.

• Cost Performance Index (CPI) = Earned Value / Actual Costs. Cost variance related as a ratio instead of a dollar amount. A ratio less than 1 indicates that the value of the work that has been accomplished is less than the amount of money spent.

In Figure 7, Project A has a CPI greater than 1.00. This showsus that the project has been earning value faster than it has beenaccruing costs.

However, Project A also has a SPI value that is less than 1.00. Although Actual Costs are low, Task 1 is behind schedule,so the project has not earned as much value as was planned.

2004March April May

Performance ReviewBACTasks Earned

ValuePlanned

ValueActualCosts CPI SPI

$850Project A $270 $335 $250 1.08 0.81

$350Task 1 $195 $260 $150 1.30 0.75

$500Task 2 $75 $75 $100 0.75 1.00

Figure 7


Forecasting FuturePerformance TrendsThe Schedule Performance and Cost Performance Indices not only monitor current project performance, they can also be used to predict future performance trends.

• To-Complete Performance Index (TCPI) = (BAC-EV) / (BAC-AC). Indicates the CPI required throughout the remainder of the project to stay within

the stated budget. • Estimate at Completion (EAC) = AC + ((BAC-EV)/CPI). A forecast of total

costs that will be accrued by project completion based on past cost performance trends.

• Variance at Completion (VAC) = EAC – BAC. The difference between the new Estimate at Completion and the original Budget at Completion.

2004March April May

$0.00

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$1,000.00

$1,500.00

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$3,000.00

Planned ValueEarned ValueBudgetActual Costs

Performance ReviewVACEACBACTasks AC EV TCPI CPI

-619.302,355.70$2,975.0 Project A $1,615.00 $2,004.73 0.71 1.24

50.00350.00$300.0Task 1 $350.00 $300.00 0.00 0.86

40.00440.00$400.0Task 2 $440.00 $400.00 0.00 0.91

63.09313.09$250.0Task 3 $175.00 $139.53 1.47 0.80

-467.87257.13$725.0Task 4 $200.00 $563.89 0.31 2.82

-210.20189.80$400.0Task 5 $100.00 $210.53 0.63 2.11

-35.34314.66$350.0Task 6 $200.00 $222.73 0.85 1.11

-58.98491.02$550.0Task 7 $150.00 $168.06 0.95 1.12


How do I get started using Earned Value Management?Identify and Organize all Project Steps

First, identify all tasks that need to be accomplished and organize the tasks into sub-groups (1). Breaking down activities into the smallest possible steps makes it easier to pinpoint schedule and cost performance problems.

Allocate the Budget and Schedule the Tasks

Each activity in the project should have a planned Budget-at-Completion (BAC). All subsequent earned value calculations will be based on this amount (2). In addition to the BAC, each task should also have a specifi c duration (3), which provides the basis for monitoring actual costs and physical progress.

2004March April May

Status Incomplete Task Completed Task Started Task

Tasks TotalBudget

3/10 5/8 Project A $2,975.0

Task 1 $300.0

Task 2 $400.0

Task 3 $250.0

Task 4 $725.0

Task 5 $400.0

Task 6 $350.0

Task 7 $550.0

3/10 5/8

(1) (2)

(3)


How do I get started using Earned Value Management?Update Task Status and Enter Actual Costs

As the project progresses, the percent complete for unfi nished tasks should be updated and monitored (4). Earned Value (EV) is determined by relating this physical progress to the BAC. Along with task status and budget, it is necessary to maintain actual costs accrued for each task in order to calculate cost performance (5).

2004March April May


%Comp.Tasks Total

Budget AC

3/10 5/859% Project A $2,975.00 $1,575.00

100%Task 1 $300.00 $350.00

100%Task 2 $400.00 $400.00

51%Task 3 $250.00 $175.00

78%Task 4 $725.00 $200.00

47%Task 5 $400.00 $100.00

73%Task 6 $350.00 $200.00

14%Task 7 $550.00 $150.00

3/10 5/8

(5)

(4)

How do I get started using Earned Value Management?


Use the Data to Make Informed Decisions

Now that all tasks have been scheduled, and the BAC, EV, Percent Complete, and AC are known, further analysis can be performed, including schedule and cost variances, performance effi ciency, and estimates-at-completion.

2002March April May

Summary Status

Completed Task CPI above 1.3

Incomplete Task CPI from 1 to 1.3

Program Review CPI below 1

$0.00

$1,000.00

$2,000.00

$3,000.00PVEVBACAC

($100.00)

$50.00

$200.00

$350.00

$500.00Schedule VarianceCost Variance

Earned Value and Performance ReviewProject/Tasks

TotalBudget

BCWS ACWPSpending

BCWPE Value

PRCNTCMPLT

SV CV CPI SPI

3/11 5/9 Project ABC $2,975.0 $1,739.90 $1,575.00 $2,004.73 67.4% $264.85 $429.74 1.27 1.15

Task 1 $300.0 $300.00 $350.00 $300.00 100.0% $0.00 ($50.00) 0.86 1.00

Task 2 $400.0 $400.00 $400.00 $400.00 100.0% $0.00 $0.00 1.00 1.00

Task 3 $250.0 $127.91 $175.00 $139.53 55.8% $11.62 ($35.47) 0.80 1.09

Task 4 $725.0 $456.48 $200.00 $563.89 77.8% $107.41 $363.89 2.82 1.24

Task 5 $400.0 $189.47 $100.00 $210.53 52.6% $21.06 $110.53 2.11 1.11

Task 6 $350.0 $159.09 $200.00 $222.73 63.6% $63.64 $22.73 1.11 1.40

Task 7 $550.0 $106.94 $150.00 $168.06 30.6% $61.12 $18.06 1.12 1.57

3/11 5/9

Summary Status




2004



$0.00

$1,500.00

$3,000.00Earned Value

Budget

Spending

Earned Value ReportProject /

TasksBudget Earned

Value

Totals for Project $4,025.0 $2,585.62 Task 1 $950.0 $743.50

Task 1-A $300.0 $235.71Task 1-B $400.0 $321.74Task 1-C $250.0 $186.05

Task 2 $1,300.0 $836.56Task 2-A $725.0 $483.33Task 2-B $225.0 $109.29Task 2-C $350.0 $243.94

Task 3 $1,775.0 $1,005.56Task 3-A $550.0 $358.14Task 3-B $800.0 $480.00Task 3-C $425.0 $167.42

FinalReview

2004



$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00

$4,000.00

Earned ValueBudgetSpending

Contract ReviewProject /

TasksBAC AC EV %

Totals for Project $4,025.0 $1,375.00 $2,563.59 63.7%

Task 1 $950.0 $725.00 $743.50 78.3%

Task 1-A $300.0 $200.00 $235.71 78.6%

Task 1-B $400.0 $350.00 $321.74 80.4%

Task 1-C $250.0 $175.00 $186.05 74.4%

Task 2 $1,300.0 $500.00 $836.56 64.4%

Task 2-A $725.0 $200.00 $483.33 66.7%

Task 2-B $225.0 $100.00 $109.29 48.6%

Task 2-C $350.0 $200.00 $243.94 69.7%

Task 3 $1,775.0 $150.00 $983.53 55.4%

Task 3-A $550.0 $150.00 $358.14 65.1%

Task 3-B $800.0 $0.00 $480.00 60.0%

Task 3-C $425.0 $0.00 $145.39 34.2%

FinalReview

Summary Program Review StatusContracts review: 11-30-01

Sign Off: _________________


Example Reports and Resources

On the following pages, several example Earned Value reports are shown. These examples, as well as the charts on the previous pages, were created in Milestones Professional 2004. Visit KIDASA.com to view these examples and more, or to download a trial version of Milestones Professional.

2005March April May


$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

PVEVBACAC

Earned Value Calculations Project/Tasks

BAC PlannedValue

ActualCosts

EarnedValue

PRCNTCMPLT

3/10 5/8 Project ABC $2,975 $1,809 $1,575.0 $2,005 67.4%

Task 1 $300 $300 $350.0 $300 100.0%

Task 2 $400 $400 $400.0 $400 100.0%

Task 3 $250 $134 $175.0 $140 55.8%

Task 4 $725 $483 $200.0 $564 77.8%

Task 5 $400 $200 $100.0 $211 52.6%

Task 6 $350 $170 $200.0 $223 63.6%

3/10 5/8

AC Spending

Budget

Earned Value

Earned Value = Budget x % Complete Planned Value = Total Budget x % duration to the current date

PV


2005March April May

Summary Status




$0.00

$1,000.00

$2,000.00

$3,000.00PVEVBACAC

($100.00)

$50.00

$200.00

$350.00

$500.00SVCV

Earned Value and Performance Review Project/Tasks

TotalBudget

PlannedValue

ActualCosts

EarnedValue

PRCNTCMPLT

SV CV CPI SPI

3/10 5/8 Project ABC $2,975.00 $1,808.97 $1,575.00 $2,004.73 67.4% $195.77 $429.74 1.27 1.11

Task 1 $300.00 $300.00 $350.00 $300.00 100.0% $0.00 ($50.00) 0.86 1.00

Task 2 $400.00 $400.00 $400.00 $400.00 100.0% $0.00 $0.00 1.00 1.00

Task 3 $250.00 $133.72 $175.00 $139.53 55.8% $5.81 ($35.47) 0.80 1.04

Task 4 $725.00 $483.33 $200.00 $563.89 77.8% $80.56 $363.89 2.82 1.17

Task 5 $400.00 $200.00 $100.00 $210.53 52.6% $10.53 $110.53 2.11 1.05

Task 6 $350.00 $169.70 $200.00 $222.73 63.6% $53.03 $22.73 1.11 1.31

Task 7 $550.00 $122.22 $150.00 $168.06 30.6% $45.84 $18.06 1.12 1.38

3/10 5/8

Summary Status




Schedule Variance = EV - PV Cost Variance = EV - AC Cost Performance Index = EV / AC Schedule Performance Index = EV / PV

2005



$0.00

$1,000.00$2,000.00$3,000.00$4,000.00

Earned Value

Budget

Spending

Earned Value ReportContract Review

Project /Tasks

Budget ActualCosts

EarnedValue

PRCNTCMPLT

Totals for Project $4,025.00 $1,375.00 $2,585.62 64.2%

Task 1 $950.00 $725.00 $743.50 78.3%

Task 1-A $300.00 $200.00 $235.71 78.6%

Task 1-B $400.00 $350.00 $321.74 80.4%

Task 1-C $250.00 $175.00 $186.05 74.4%

Task 2 $1,300.00 $500.00 $836.56 64.4%

Task 2-A $725.00 $200.00 $483.33 66.7%

Task 2-B $225.00 $100.00 $109.29 48.6%

Task 2-C $350.00 $200.00 $243.94 69.7%

Task 3 $1,775.00 $150.00 $1,005.56 56.7%

Task 3-A $550.00 $150.00 $358.14 65.1%

Task 3-B $800.00 $0.00 $480.00 60.0%

Task 3-C $425.00 $0.00 $167.42 39.4%

FinalReview


Contracts review: 11-30-02

Sign Off: _________________


2005March April May

Summary Status Program Review CPI from 1 to 1.3

Completed Task Incomplete Task CPI above 1.3 CPI below 1

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

PVEVBACAC

Performance ReviewProject/Tasks

TotalBudget

PlannedValue

ActualCosts

EarnedValue

PRCNTCMPLT

SV CV CPI SPI

Project ABC $2,975.0 $1,808.97 $1,575.00 $2,004.73 67.4% $195.77 $429.74 1.27 1.11

Task 1 $300.0 $300.00 $350.00 $300.00 100.0% $0.00 ($50.00) 0.86 1.00

Task 2 $400.0 $400.00 $400.00 $400.00 100.0% $0.00 $0.00 1.00 1.00

Task 3 $250.0 $133.72 $175.00 $139.53 55.8% $5.81 ($35.47) 0.80 1.04

Task 4 $725.0 $483.33 $200.00 $563.89 77.8% $80.56 $363.89 2.82 1.17

Task 5 $400.0 $200.00 $100.00 $210.53 52.6% $10.53 $110.53 2.11 1.05

Task 6 $350.0 $169.70 $200.00 $222.73 63.6% $53.03 $22.73 1.11 1.31

Task 7 $550.0 $122.22 $150.00 $168.06 30.6% $45.84 $18.06 1.12 1.38

Summary Status Program Review CPI from 1 to 1.3

Completed Task Incomplete Task CPI above 1.3 CPI below 1

Actual Cost

Budget

Earned Value

Schedule Variance = EV - PV Cost Variance = EV - AC Cost Performance Index = EV / AC Schedule Performance Index = EV / PV

Planned Value

Materials for further Earned Value Management research:

Fleming, Q., & Koppelman, J. (2000). Earned Value Project Management. 2nd Ed. Pennsylvania: Project Management Institute.

Lewis, J. (2000). The Project Manager’s Desk Reference. New York: McGraw-Hill.

Portny, S. (2001). Project Management for Dummies. New York: Hungry Minds, Inc.

KIDASA.com - Home of KIDASA Software, Inc., makers of Milestones Professional.

EarnedValueManagement.com - All about Earned Value. Defi nitions, examples, and more.

PMI.org - Home of the Project Management Institute, and a variety of PM resources.

Copyright ©2005 KIDASA Software, Inc. All rights reserved. www.kidasa.com. This publication may be distributed freely, as long as it is distributed in its entirety.

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